2024 Fuel Demand Boom: Is India’s Energy Future at Risk with Increasing Reliance on Oil?

India's fuel consumption surged in 2024, reflecting the country's robust economic growth and escalating energy demand as it steers toward its ambitious goal of becoming a ‘Viksit Bharat’ (Developed India) by 2047. According to data from the oil ministry, petrol consumption rose by nearly 8% until November 2024 compared to the previous year, while diesel—the most consumed petroleum product in the country—saw a growth of 2.4% in the same period.

Fuel Demand Surge Driven by Industrial Growth

The uptick in fuel demand, particularly in petrol and diesel, is primarily attributed to a rise in industrial activities and increased economic output. As the country’s industrial base expands, fuel consumption has grown in tandem, especially for diesel which is predominantly used in trucks, commercial vehicles, and farm machinery. By November 2024, India's diesel consumption reached 83,087 tonnes, while petrol consumption stood at 36,137 tonnes during the same period.

Rising Domestic Demand for Other Petroleum Products

In addition to the steady increase in fuel demand, other petroleum products such as aviation turbine fuel (ATF) and liquefied petroleum gas (LPG) also saw significant growth in 2024. This increase is indicative of both growing domestic consumption and the expansion of India’s middle class, alongside a rise in consumer spending.

Changing Consumption Patterns: Petrol on the Rise

While diesel remains the backbone of India's transport and industrial sectors, changing consumption patterns are beginning to emerge, with petrol demand steadily outpacing diesel consumption. The shift is largely influenced by the growing middle class, increased private car ownership, and greater consumer expenditure on personal mobility.

Oil Companies Plan Expansion Amid Rising Demand

To meet the surging demand, India’s major oil companies—Indian Oil Corporation Limited (IOCL), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL)—are taking proactive steps by setting up new refineries and expanding the capacity of existing facilities. These initiatives are designed to ensure the country is prepared to meet its fuel demands in the face of rapid growth.

India Poised to Drive Global Oil Demand Growth

Despite global efforts to transition to alternative fuels, India's reliance on oil is expected to remain strong in the coming years. The government forecasts India to become the largest contributor to global oil demand growth by 2030, as the rise in oil consumption in developed economies and China is expected to slow down or even decline.

According to the Indian Oil Market Outlook to 2030, industrial expansion in India will be a major driver of diesel demand, contributing to almost half of the nation's increase in oil consumption and more than one-sixth of the total global oil demand growth by the end of the decade. The country’s petroleum product demand is projected to grow by nearly 2 million barrels per day (bpd) by 2035, as per analysis by S&P Global Commodity Insights.

Conclusion: India’s Growing Fuel Demand Reflects Economic Resilience

As India moves towards its long-term development goals, the rise in fuel demand underscores the nation’s economic resilience and the increasing need for energy to fuel growth. With a focus on expanding domestic oil infrastructure and meeting the needs of a growing economy, India is positioning itself as a significant player in the global energy market.

Key Takeaways:

• Fuel consumption in India surged in 2024, with petrol and diesel seeing significant growth.
• India’s oil companies are investing in expanding refinery capacity to meet demand.
• Despite growing alternative fuel interest, India’s reliance on oil will continue to rise, contributing to global oil demand growth by 2030.